What is a Statement of affairs

 

The Statement of Affair is a summary of a Comapny’s assets and liabilities. It states the net book value and amount expected to realise at the date of Insolvency of the business. Accompanying the balance sheet is a list of creditors and shareholders.


The format of the SOA is different to a traditional balance sheet and certain calculations and considerations will be required.


 

What is the SOA for?

The SOA provides a useful source of information for both the Administrator and the creditors. Its analysis can be used to establish:


  • The likely return to creditors
  • The extent of the insolvency
  • Whether the directors have concealed assets from the administrator
  • Whether there are indications of wrongful trading
  • Once the administration is complete the actual performance of the administrator.


It is a very important document in the insolvency and is lodged at CRO so that the public have full visibility as to the position of the company at insolvency. It is often referred to by lenders should directors get involved in new ventures before lending to the new company to understand how serious the previous insolvency was. The SOA may also be considered when determining whether a director should be disqualified.



How to complete a Statement of Affairs

Many directors complete the Statement of Affairs not realising that they can normally get it prepared professionally for no cost to them – the cost is met by the Administrators under the Insolvency Act 1986. 


Whilst the concept of the SOA is simple, the calculations and presentation is more complex and changes along with case law. Consideration must be given to:


Which secured creditors have priority


The recoverability of inter-company balances (which may be complex if a whole group enters Administration


Any cross company guarantees and the potential liability that may crystalise as a result


Employee claims for notice, redundancy, holiday pay, arrears, etc. and the amount split between preferential and non-preferential.


The impact of any potential Reservation of Title claims


The potential liability of claims that have not crystalised such as landlord claims


    • What our clients say about us:

      In December 2012 we again got 10 out of 10 for service and for getting results

      1. How satisfied were you with your service? "10 out of 10"
      2. What was the best thing for you in using Complete Financial? "I got results!"

      "I have recommended Complete Financial to my friends, family and work colleagues."

      John O' Callaghan
      Ballyphehane, Cork

      Bill has guided both
      myself and my husband through some very
      in depth and to us
      important financial
      areas. We are very
      grateful to you
      for giving us
      peace of mind.

      Celly O' Brien
      Kinsale, Co. Cork

      I would highly commend Complete Financial.

      Siobhan Kelly,
      Tivoli, Co. Cork

      Fergus was more than helpful

      Marguerite Murphy,
      Mallow, Co. Cork

      Subscribe!